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Position of TVEL FC in the World Market of the Front End of Nuclear Fuel Cycle

REVIEW OF FE NFC WORLD MARKET

According to IAEA PRIS as of the end of 2016 there were 449 NPP power units being operated in the world, including 36 in the Russian Federation1. 75 reactors are running on Russian fuel.

Most operating power units are located in Asia-Pacific region, North America and Western Europe. At the moment 61 power units are under construction in 16 countries2, including 7 in Russia.

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Key indicators of the global nuclear fuel market in 2016

75

Number of reactors running on Russian-made fuel, ea.

449
NPP units in operation, worldwide
61
NPP units under construction, worldwide [i]
16
Countries with NPP under construction

NPP units in operation as of the end of the reporting year

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Fabrication Market

At the moment, more than 80% of the world reactor fleet consists of light water reactors (LWR) segment, including PWR, BWR and VVER reactors. It is expected that LWR will amoun to 89% of new reactors put into operation by 2025. The market of PWR reactors is the largest one. At the moment more than 50% of operating reactors in the world are PWR reactors.

Major foreign manufacturers of fuel for light water reactors are located in USA and Western Europe: AREVA (fuel for BWR and PWR reactors), Global Nuclear Fuel (fuel for BWR reactors) and Westinghouse (BWR, PWR and VVER). TVEL Fuel Company is main supplier of fuel for reactors of Russian design.

Main events of the nuclear fuel fabrication market in 2016:

  • TVEL JSC and Global Nuclear Fuel-Americas (GNF-A) signed the agreement on the establishment of a strategic alliance with the purpose of joint activities for licensing, marketing and fabrication of fuel for US operators of PWR reactors.
  • signing by TVEL JSC and the US NPP operator of the first contract for pilot production of TVS-K on the American market;
  • signing of the first commercial contract for supply of TVS-K between TVEL JSC and Vattenfall Nuclear Fuel AB (Sweden);
  • in accordance with the restructuring plan of AREVA group, the control over AREVA NP, engaged in fuel fabrication, will pass to the French power production company EDF.

Milestones 2016 in the market of nuclear fuel for reactors of Russian design in Ukraine and countries of EU:

  • URENCO and Energoatom National Nuclear Energy Generating Company signed a three-year contract for supply of enriched uranium product to Westinghouse factory in Sweden for production of fuel assemblies (FA) for Ukrainian NPPs;
  • Unit 5 of Zaporozhye NPP in Ukraine was loaded with the first batch of the modified fuel by Westinghouse, Unit 3 of South-Ukrainian NPP was loaded with the second reload;
  • Czech energy company ČEZ signed the contract with Westinghouse for supply of six pilot fuel assemblies to be operated by Temelin NPP with VVER-1000 reactors.

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Customer satisfaction is of highest priority for TVEL Fuel Company. The assets of TVEL FC in all process cycles of nuclear fuel fabrication make it possible to offer the customers comprehensive solutions at NF market with flexible terms and conditions. Location of TVEL FC assets in different regions of Russia renders effective cooperation in a wide range of issues and aspects.


Uranium Conversion and Enrichment Markets

In 2016 the price for separative work unit (SWU) continued its decline that began in 2011. As of the end of the reporting period the price on the spot market dropped below USD 50 per SWU. This is due to the surplus capacity that resulted in excess of conversion and enrichment services over the current demand in the market.

Because of the current market conditions most suppliers of conversion and enrichment services do not use the production capacity to the full, and reduce the volume of output. However, in anticipation of greater demand in a medium- and long-term perspective, the companies modify their facilities and replace outdated plants with more modern and efficient:

  • Construction of a new conversion plant AREVA Comhurex II in France is in its final stage, a pilot conversion production of UF4 into UF6 was launched.
  • At year-end 2016 new enrichment plant AREVA Georges Besse II in France reached its project capacity 7.5 million SWU/year.
  • In accordance with the restructuring plan of AREVA group, conversion and enrichment facilities that are currently under the control of AREVA NC will be transferred to new company NEW CO, where all FE NFC cycles will be accumulated, except for fabrication.
  • URENCO closed the number of technologically outdated sites at its enrichment plants in Europe. Meanwhile, construction of the third stage of the enrichment plant URENCO in USA is going on, it is planned to reach the estimated capacity of 5.7 million SWU/year by 2023.
  • Focused on self-sufficiency in products and services throughout the whole nuclear fuel cycle, China expands its conversion and enrichment capacities, and focuses on the development of domestic reactor park.

2016 was remarkable for stronger cooperation of players of different stages of FE NFC, which will allow these companies to offer the package of FE NFC services to their current and prospective customers:

  • In April 2016 the company ConverDyn, engaged in promotion and sales of conversion services from the only US conversion plant Metropolis, and NAC Kazatomprom signed the cooperation agreement in the sphere of uranium products marketing. Due to this agreement the companies will offer the package services in conversion and U3O8
  • In April 2016 ConverDyn signed the memorandum of understanding with Centrus Energy Corp. (earlier USEC) to study the opportunities of joint sales of NFC products and services to energy companies in different countries of the world. Such cooperation will give the companies the opportunity to make the package offer UF6 and SWU to their customers.

Customer satisfaction is of highest priority for TVEL Fuel Company.

The assets of TVEL FC in all process cycles of nuclear fuel fabrication make it possible to offer the customers comprehensive solutions at NF market with flexible terms and conditions. Location of TVEL FC assets in different regions of Russia renders effective cooperation in a wide range of issues and aspects.

TVEL Fuel Company fully implements its comprehensive approach to activities on the world market. The Company possesses the assets for all cycles of nuclear fuel production, which enables offering FE NFC products and services in the form of package supplies. This contributes to flexible contract pricing and optimized transport logistics. With a number of enterprises in each FE NFC cycle, the Company is able to make highly reliable deliveries.


FE NFC market growth outlook

FE NFC market outlook depends on the current state of the reactor fleet and the plans for construction of new units. According to different scenarios in 2030 perspective, the nominal capacity of the world reactor fleet will increase, the only difference is in growth rate. According to the forecasts by IAEA1 by the year 2030 the nominal capacity of the world fleet of nuclear reactors may increase from ~390 GW to ~490 GW.

Asia region with many new units under construction is the most promising market. The reduced demand is expected in the FE NFC markets of Europe and North America due to ageing of the reactor park and small quantity of new projects aimed at replacement of the retired capacity.

Taking into account the plans for commissioning of new reactors and fuel reserves kept by different market players, primarily by operators and manufacturers, real growth in demand for all cycles of FE NFC is expected after the year 2020.

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POSITION OF TVEL FC IN THE WORLD MARKET OF THE FRONT END OF NUCLEAR FUEL CYCLE

TVEL Fuel Company is a global leader in nuclear fuel production. The Company’s share in the global market of fuel fabrication in 2016 reached 17%. TVEL Fuel Company jointly with Techsnabexport JSC holds one third of the world market services on uranium enrichment.

TVEL Fuel Company is sufficiently competent to produce and supply fuel and its components for reactors designed in Russia, light-water Westerndesign reactors (PWR and BWR), and fuel components for Western-design pressurized heavy water reactors (PHWR). The Company successfully manufactures nuclear fuel from reprocessed uranium (in cooperation with AREVA) in compliance with the European regulations for manufacturing technology and the products manufactured. The Fuel Company elaborated the in-house design of FA for PWR reactors — TVS-K.

In recent years alongside with the increasing political pressure on European NPP operators, the message is expressed concerning the necessity to reduce the power dependence on Russia, to diversify supply sources; this can be used as a means of competition restraint.

Due to competition growth in the fuel fabrication market, the initiatives of TVEL JSC on improvement of technical and economic features of the fuel, making its production more attractive for customers both on traditional fuel market for reactors of Russian design, and on fuel market of PWR reactors, are extremely important.

Key competitors of the nuclear fuel fabrication market in 2016, %

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TVEL JSC supplies excellent fuel. Quality, reliability and safety are basic indicators of the Russian fuel. Without lowering the level of stringent safety requirements to the supplied fuel, Paks NPP managed to increase the reactor power and to switch to 15-month fuel campaign. This created an opportunity to increase performance of power units. The success was achieved both owing to Paks NPP and TVEL JSC specialists.

István Hamvas

Director General, Paks NPP (Hungary)
(right)

Presence of TVEL Fuel Company in the global market of nuclear fuel for power reactors

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3%  China
31%  India
100%  Iran
100%  Armenia
100%  Russia
85%  Ukraine
100%  Bolgary
36%  Finland
100%
Slovakia
100%
Hungary
100%
Czech
Republic
1
Number of units
Share of NPP

Supplies of nuclear fuel for power reactors by TVEL Fuel Company

No. Country Operations NPP Project status (in progress/ prospective), source of supplies
Armenia Nuclear fuel supply and related services NPP Metsamor 2 In progress Direct supply
Bangladesh Nuclear fuel supply and related services Ruppur NPP Prospective
Belarus Nuclear fuel supply and related services Belorusian NPP Prospective
Hungary Nuclear fuel supply and related services NPP Kozloduy 5,6 In progress Direct supply
Hungary Nuclear fuel supply and related services NPP Paks 1, 2, 3, 4 In progress Direct supply
Hungary Nuclear fuel supply and related services NPP Paks 5, 6 Prospective
Egypt Nuclear fuel supply and related services El Dabaa NPP Prospective
India Nuclear fuel supply and related services NPP Kudankulam 1, 2 In progress Direct supply
India Nuclear fuel supply and related services NPP Kudankulam 3, 4» Prospective
India Nuclear fuel supply and related services Rajasthan NPP Tarapur NPP In progress Direct supply
Jordan Nuclear fuel supply and related services NPP in Jordan Prospective
Iran Nuclear fuel supply and related services NPP Busher 1 In progress Direct supply
Iran Nuclear fuel supply and related services NPP Busher 2, 3 Prospective
China Nuclear fuel supply and related services NPP Tianwan 1, 2 In progress Direct supply
China Nuclear fuel supply and related services NPP Tianwan 3, 4 Prospective
Slovakia Nuclear fuel supply and related services NPP Mochovce 1, 2, NPP Bohunice 3, 4 In progress Direct supply
Slovakia Nuclear fuel supply and related services NPP Bohunice 3, 4 Prospective
Ukraine Nuclear fuel supply and related services NPP Rovnenskaya 1, 2, 3, 4, NPP Khmelnitskaya 1, 2, NPP Zaporozhskaya 1, 2, 3, 4, 6, NPP South-Ukrainian 1, 2 In progress Direct supply
Finland Nuclear fuel supply and related services NPP Loviisa 1, 2 In progress Direct supply
Finland Nuclear fuel supply and related services Hanhikivi 1 Prospective
Czech Republic Nuclear fuel supply and related services NPP Dukovany 1, 2, 3, 4, NPP Temelin 1, 2 In progress Direct supply
Sweden Nuclear fuel supply and related services NPP Ringhals Prospective
Countries in Western Europe Current supplies of nuclear fuel and components in cooperation with AREVA 3 power units In progress cooperation with AREVA
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The key to the successful cooperation with traditional and new partners:

  • TVEL offers its customers reference fuel;
  • TVEL offers package supply of fuel and flexible pricing policy: TVEL FC enterprises cover all NFC cycles (except for natural uranium);
  • TVEL uses unique components and raw materials to increase commercial appeal;
  • TVEL is customer-oriented, and strives for the fullest possible satisfaction of requirements of the customers;
  • TVEL continuously improves the fuel and the strategy of the fuel cycle management with due consideration to changing environment;
  • TVEL provides scientific and technical support of the fuel operation;
  • TVEL offers the fuel designed to enable power cycling and increase of thermal power of stations.
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TVEL Fuel Company will supply nuclear targets required for research and medical purposes. We chose TVEL JSC as the supplier of nuclear targets due to exceptionally attractive offer — the best in terms of price and quality.

Krzysztof Kurek

Director of the National Centre for Nuclear Research of Poland

1.
Москва
АО «ТВЭЛ», АО «ВНИИНМ»,
АО «МЗП», АО «ЦПТИ»

2.

Московская область

АО «МСЗ» (электросталь)

3.

Санкт-Петербург

Филиал ООО «НПО «Ценротех»

4.

Владимирская область

АО «ВПО «Точмаш» (Владимир),
ПАО «КМЗ» (Ковров)

5.

Удмуртская республика

АО ЧМЗ (Глазов)

6.

Свердловская область

АО «УЭХК»,
ООО «НПО «Центротех» (Новоуральск)

7.

Новосибирская область

ПАО «НЗХК» (Новосибирск)

8.

Красноярский край

АО «ПО «ЭХЗ» (Зеленогорск)

9.

Томская область

АО «СХК» (Северск)

10.

Иркутская область

АО «АЭХК» (Ангарск)